October 5, 2014

The government on Thursday outlined
plans to provide £300m worth of support subsidies to the renewable
power industry this autumn but has angered the solar industry and been accused
of not providing value for money.

The budget for a new auction system for green electricity
schemes was expected to be a little over £200m but has been raised using cash
that was underspent in previous funding rounds.

Ed Davey, the energy and climate change secretary, said his
new “contract for difference” (CfD) scheme, paid for by the consumer, would help
underwrite the development of renewable energy that would reduce reliance on
imported gas.

“We are transforming the UK’s energy sector, dealing with a
legacy of underinvestment to build a new generation of clean, secure power
supplies that reduce our reliance on volatile foreign markets.

“Average annual investment in renewables has doubled since
2010 – with a record breaking £8 billion worth in 2013. By making projects
compete for support, we’re making sure that consumers get the best possible
deal as well as a secure and clean power sector.”

But the CfD auction system has been purposefully skewed
towards the less established - and more expensive - sectors such as offshore
wind and tidal and away from the cheaper and more mature technologies such as
onshore wind and solar.

A previous system of subsidy support - the renewable
obligation (RO) - is being phased out in 2017 for most industries but this has
been fast-forwarded for large scale solar arrays to April next year.

The Department of Energy and Climate change (Decc) says that
the move has been made because solar is using up too much of the overall
subsidy budget but the Solar Trade Association denied this.

“Solar has been the rising star in the coalition’s renewable
energy programme and has been championed recently by the Prime Minister at the
UN and by Ministers at conference,” said Paul Barwell, chief executive of the
STA.

“Why is the UK government putting this industry’s incredible
achievements on solar power at risk? To curtail its growth now is just perverse
and unjustified on budgetary grounds - solar has only consumed around 1% of the
renewables obligation budget,” he added.

He was supported by Friends of the Earth, whose renewable
energy campaigner, Alasdair Cameron, argued the government move would be bad
news for jobs, the climate and people wanting to plug into clean power.

“Solar could be cheaper than fossil fuels in just a few
years, but it needs a little more help from government to get it there. Failure
to invest now will mean a huge missed opportunity for the UK economy,” he said.

The raised budget to £300m has been welcomed by the wider
renewable power sector but industry officials said the complex structure and
cost would unfairly benefit large utilities at the expense of smaller and
medium-sized enterprises (SMEs).

Nina Skorupska, chief executive of the Renewable Energy
Association, argued “the allocation process is still too risky and complicated
for most of the renewable energy independents and SMEs that are trying to break
into the UK’s consolidated energy market, further entrenching the dominance of
the vertically integrated utilities.

She added: “Ministers have failed to deliver value for
money. In the short term, the cheaper, more established technologies have been
given less than a quarter of the available budget in the first round, with the
rest going to the less established technologies. In the longer term, these
younger, less established technologies will struggle to achieve cost reductions
without minima to guarantee their continued growth.”